Jaguar is working on a series of high-performance cars that will provide fresh head-on rivalry for BMW’s M division and Mercedes-AMG - and an extreme M3-rivalling version of the new XE is among the models being lined up.

Buoyed by one of the freshest product lines in the industry - with the XE being joined by the brand-new F-Pace crossover and the second-generation XF by the end of this year - the British manufacturer is aiming to roll out halo editions that will appeal to well-heeled customers in key markets.

Jaguar also expects the new performance models to boost brand equity and legitimacy in the same way that the M3 and C63 have helped the 3 Series and C-Class.

The fastest XE at the car’s launch is the supercharged V6 S, which has 335bhp - the same output as the entry-level F-Type. This could also be joined by a diesel S using the 237bhp, 369lb ft V6 that’s already seen in the XF.

For the performance flagship, instead of using the F-Type S’s more powerful V6, which would still fall short of the M3’s power output, Jaguar is expected to slot in the V8 from the F-Type roadster to create the XE-R. That should have 488bhp, enough to slash the XE’s 0-62mph time down to well under 5.0sec.

Jaguar sources have confirmed that this V8 is actually easier to fit under the XE’s bonnet than the more upright Ford-sourced four-cylinder petrol motor and Jaguar Land Rover’s own Ingenium four-cylinder diesel.

The S’s adaptive dampers will be retuned, giving the XE-R a much more focused chassis set-up, and the eight-speed ZF automatic transmission will be reprofiled for crisper, more aggressive shifts in manual mode.

The XE-R will probably be priced to match the M3, starting at about £55,000.

With this powerplant, the XE-R will fulfil the role of taking on the M3 and the C63 while still allowing the potential for JLR’s Special Vehicle Operations to create its own, even more hardcore edition.

That could use the 542bhp V8 from the F-Type R Coupé, allowing the fastest XE to outgun both of its German rivals and Audi’s forthcoming next-generation RS4. This version of the small Jaguar saloon would get further aerodynamic tweaks and access to more exotic materials, including carbonfibre.

Jaguar officials remain publicly cautious on the prospects of high-performance models. One high-level source said: “We need to get the next year to 18 months over and the new products established. Then our sales volumes will have doubled and we’ll be a different company, with the scope for further investment.”

However, it’s still thought that faster, more exclusive versions of existing cars are likely to appear before different bodystyles based on the XE. A luxury-focused coupé — an indirect successor to the XK, in effect - has been sketched by design director Ian Callum’s team, but it is likely to have to wait at least until a facelift of the saloon appears in late 2017.

Steven de Ploey, Jaguar’s global brand director, told us: “A replacement for the XK is not a priority, because we made the right choice with F-Type. XK did a very good job of bridging the gap. It was a GT with two sharp ends of luxury and performance, so it ended up being a blend.”

The second new fast Jaguar will be a Porsche Macan Turbo-chasing version of the forthcoming F-Pace. The new crossover is due to make its public debut at the Frankfurt motor show this autumn, and sources are already suggesting that it could end up outselling the XE. The F-Pace is even more likely to get the larger engine. One source said firmly: “The V8 will definitely be fitted to F-Pace.”

It’s likely that this motor will have 488bhp in a car that will be badged F-Pace R. That will allow space above it for SVO to slot in an even faster edition if there’s enough demand - although the specialist division may choose to offer luxury-focused F-Paces with that spec of V8 instead of even more powerful versions.

Jaguar officials have been quick to guard against a ‘power race’, preferring to focus on handling agility instead of out-and-out brawn.

Pricing of the hot F-Pace will depend on the figures for the rest of the range, but it’s likely to be slightly more expensive than an XE overall. That would place an R version at about £60,000, or roughly the same as the Macan Turbo.

Beyond the XE and F-Pace, Jaguar also has plans for SVR versions of the F-Type. When asked if the F-Type R would be the ultimate performance version of the car, its vehicle director, Ian Hoban, said: “No. We have ideas. Look at the very successful sports cars and to me they have a reason to repurchase every year — that 12-month cycle to keep them at the front of your mind.

“I’ve a list as long as my arm of what could be done to F-Type. We anticipated what we could do with the car five or six years ago and engineered it into the layout. It’s all about business priorities.”

He added: “SVO are a very creative bunch. They’re all petrolheads to a man and woman. It’s an interesting skunkworks project.”

Jaguar takes its new small executive saloon 'into a territory where the biggest mistake would be to try to beat rivals on paper. A bigger power output and quicker 0-62mph time may earn bragging rights, but...' - Autocar, yesterday, failing to understand that for most buyers bragging rights is almost everything.

In my opinion, they should concentrate on getting the XE line up complete, with a 2 door hard and soft top coupe, and an estate, before they go chasing the big guns, the profits are in a bigger more diverse range, not halo models..

So far I much prefer Jag's S range being that they are better handling and less….. american in nature (too much power in a chassis that cannot cope with it). I hope Jaguar can prove me wrong and create a genuine rival to the M3/4 or create something like an Alpina B3 (much more road orientated than track).

With the current trend (and pressures) towards lower emissions and better mileage I fail to understand why a model that brags about its green credentials and hopes to take on the competition head-on would stick to a large, heavy, gas-guzzling V8.
I love a V8 soundtrack like any other petrolhead, but the logical solution would be to get a higher output out of the supercharged V6 (taking it from 380 to 440hp isn't that much of a stretch) or, better yet, dumping the inefficient supercharger and adding quick-spooling turbos. Heck, even Cadillac is doing it with the ATS-V